Von Meister's Not-So-Trivial Pursuit

By Michael SchrageBy Michael SchrageSeptember 23, 1985

Just when you thought it was safe to pick up the phone, William F. von Meister is back. Entrepreneurially aroused by a fortuitous mix of pornography and trivia, von Meister is set to launch his latest venture in telecommunications: Prizeline Communications, the Touch-Tone equivalent of "Dialing for Dollars." Anyone with a Touch-Tone phone and a credit card can play.

"This one is a real winner," chortles von Meister, the 43-year-old chain-smoking chairman of the fledgling enterprise, who has had his share of real losers. "Everybody likes playing games."

Those feeling an eerie sense of de'ja vu may recall that von Meister is Washington's perennial entrepreneur. He launches new companies as naturally and regularly as the cherry blossoms blossom in the spring. Respected by venture capitalists as a brilliant ideas man, some of his start-ups have failed almost as intriguingly as others have succeeded. He usually makes money either way.

In 1978, he started The Source, a home computer network ultimately sold to Reader's Digest. Then he tried the Home Music Store, a failed effort to use satellites to beam digitally recorded music to cable television systems around the country.

Next was Control Video Corp., a company originally designed to transmit video games over the phone lines to Atari video-game consoles. That idea collapsed along with the video-games market, and new management had to be called in to supplant von Meister and realign the company for the home computer market.

Now, $21 million later, Control Video is but a husk of its former self, and Quantum Communications, a Control Video spin-off, is making a go of the electronic distribution business sans von Meister. An Aural Stimulant

Von Meister brushes all that aside. The inspiration for his latest venture, he says, came "when I first learned of the proliferation of '976' services in New York."

The 976 numbers are the Dial-It services: Dial-the-Weather, Dial-a-Joke and Dial-a-Prayer. Some of those numbers generate millions of calls and hundreds of thousands of dollars a year. What really caught his eye -- and ear -- was the success of a New York Telephone Co. Dial-It service provided by High Society magazine.

Better known for revealing photography than editorial content, High Society sponsors a Dial-It number that features aural sex.

"I heard that the High Society numbers were pulling in something close to half a million calls a day," von Meister recalls. "That's obviously a fascinating number."

Von Meister began pondering telephonic services that might inspire similar responses. He noted "the phenomonal success of Trivial Pursuits and its imitators. If you go into a Toys 'R' Us, there's a wall of trivia type games." This was a fad with megabuck potential.

Then an epiphany: Von Meister would fuse trivia and telephones into a Dial-a-Game service that gives callers a chance to answer questions to win a prize in exchange for a fee.

"The next step was to find out if there were hardware systems for voice capable of handling very large databases," von Meister said. The answer was "yes" -- from Voice Computing Technologies in Norcross, Ga.

So, armed with a toll-free number (800-CASHPOT), the latest in voice-synthesis technology and more than 10,000 trivia questions ranging from the length of a hummingbird's intestines to lifetime batting averages, von Meister now has all the pieces necessary to create an electronic games-for-profit network.

Von Meister wants to keep it simple for the masses -- pick up any Touch-Tone phone; dial the toll-free Cashpot number; register to play and receive a personal-code number; and a computer-generated voice reads you trivia questions to answer for prizes and points. Select the level of trivia difficulty to win prizes from $50 to $10,000. The more you play, the more chances you have to collect bonus points for prizes and win cash. Of course, you pay as you play: It costs a couple of dollars for the right to take the test, and your credit card runs up the tab as you tap to the Cashpot questions.

Multiple choice? Touch the appropriate 1, 2, 3 or 4 button.

When was the Battle of Hastings? Tap 1066.

What is the length of a hummingbird's intestines in feet? Try tapping 46.

The questions may be trivial, but Prizeline's business plan shows that the financial stats aren't: Von Meister projects the company will gross more than $17 million from a 136,000 subscriber base by the end of its first year, and will turn a profit.

"With any luck, this could be to quiz shows what the lottery is to gambling," says Jerry Calabrese, the publisher of Games magazine, which plans a joint promotion with Prizeline later this year.

Starting next month, Prizeline plans to begin testing Cashpot Trivia locally in Denver and Boston. The Denver test will be conducted jointly with local radio stations. The Boston test will be a cross-promotion with The Boston Herald -- the flashy daily tabloid owned by the Australian-born media mogul Rupert Murdoch. The company also will test a sports trivia game called Pro-Sports and a version of Bingo called Ringo.

"It's an ingenious approach to games playing," says Bill McDonald, who oversees circulation for Murdoch's chain of U.S. newspapers, "but it's kind of early to tell what it can do for a newspaper. I don't think it's really a tremendous circulation builder, but it's kind of interesting. I guess it's part of the electronic boom."

The virtue of these joint ventures, von Meister points out, is that the costs of advertising and promoting the service are shared, thus easing the financial burden on Prizeline. Similarly, the joint arrangement gives Prizeline the opportunity to fine-tune the service for a national rollout next year or set up local franchises for its acoustic-games network.

By the end of this year, von Meister expects Prizeline to have more than 30,000 subscribers and be cozily in the black.

Cashpot represents perhaps the most novel of the so-called "audiotex" services that have piqued the time and money of some of that nation's largest information companies. Audiotex is a market opportunity that several analysts predict will come close to billion dollar status by the decade's end.

While Dial-It services have been immensely profitable for some companies, according to a spokesman for New York Telephone, those audiotex systems usually rely on a tape recorder to recite the same message to listeners. New York has more than 40 such services; Chesapeake & Potomac Telephone offers 23 audiotex lines for vendors.

The electronic systems that entrepreneurs like von Meister propose allow audiotex to become interactive, with the telephone keypad becoming a device for entering data.

Dun & Bradstreet offers a system that gives corporate credit ratings over the phone; U.S. Quotes provides stock quotations by phone to subscribers who tap in the ticker symbol of the desired stock. Dow Jones offers Dow Phone -- an interactive financial newswire -- while several banks use audiotex systems for depositors to check the status of their accounts or to transfer funds.

For now, von Meister is counting on trivia to pull in a whole new audiotex audience. He's not so much concerned that the service will have thousands of casual subscribers, but that there will be a hardcore user group that generates the bulk of Prizeline's revenue and profits.

He figures that each member of this group will play the games an average of six times a month at $2.40 a play -- for a monthly sum of $14.40. (On the other hand, an earlier version of his business plan predicted $3.47 in revenue per play).

What will the hardcore Cashpot user look like? Von Meister thinks it will be the bored Yuppie with dollars to burn and a desire to match wits with a trivia game for cash.

Games magazine's Calabrese thinks it will be the bored housewife who will be picking up the phone during soap opera commericials.

Von Meister "thinks it's men and I think it's housewives," Calabrese says, "This is like a TV game show by phone, but it's even better because you're the contestant. Even if you lose, you get points that can be collected for prizes." A Question of Staying Power

"I think the key thing is to make the games entertaining enough," says Robert Hurley, executive vice president of Levy, Flaxman, Prizeline's New York-based marketing consultant. "It could turn out to be just a fad. This has to become a regular part of entertainment activity -- like playing Trivial Pursuit or buying a lotto ticket. Will people play it on a regular basis? Will they continue to play? That is definitely an advertising challenge -- and it could determine the success or failure of the business."

Indeed, will people really pick up the phone to play six times or more a month? Or are those estimates unduly high given the untested nature of the service? What's more, will people be willing to pay the $1 to $5 a play that Prizeline initially intends to charge?

Von Meister concedes that all those figures are elastic subject to the results of the upcoming tests and that it is too early to measure the financial validity of the Cashpot concept.

More ominous for Prizeline is the possibility that the attorneys general of various states may legally challenge the service as a "game of chance" and thus try to outlaw it. Prizeline's legal counsel Martin Cohen of Cohen & Silverman in New York, insists that the company offers games that are technically and legally "based on the skill of the participant" and should thus avoid legal challenge. But both von Meister and Cohen concede that legal officials in various parts of the country could bring Prizeline to court -- a time-consuming and expensive barrier that the company's investors, such as local restaurateur Gordon King, are worried about.

Nevertheless, von Meister is confident that Prizeline will meet or exceed virtually every milestone in its business plan. That would mean the company plans to make a $500,000 initial public stock offering in the first quarter of next year. By that time, von Meister is confident that Cashpot's hardcore players will want a piece of the company at its planned $1-a-share price. He plans to make the prospectus for the offering available over the Cashpot network.

"Hit 1 and we'll mail you a copy of the prospectus," he says, "Really!"